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Alexboltyan

EUR/USD Fails To Retain Gains, Back Below 1.0500The EUR/USD has come back under pressure on Wednesday as risk aversion struck financial markets on renewed concerns about ramping inflation and prospects of a stagflation case developing in the Eurozone. The pair pulled back from a weekly high of 1.0563 to a low of 1.0462 after the European Union reported April's CPI figures. Consumer inflation reached 7.4%, while core prices grew 3.5% in the year to April. The euro weakened across the board, losing more than 100 pips against the dollar and the Swiss franc. The EUR/CHF pair has dropped over 130 pips, or 1.3%, despite Swiss National Bank Chairman Thomas Jordan's warning that they are ready to intervene in currency markets if needed. Meanwhile, the U.S. Dollar Index, which measures the value of the American currency against a basket of peers, posted the first daily gain after a correction that led to three consecutive daily losses. The risk-off environment sent Wall Street indexes into the red while boosting bond demand, therefore pressuring yields. Federal Reserve Chairman Jerome Powell's comments on Tuesday helped the dollar to regain its appeal. Powell said the FOMC is comfortable with 50 bps hikes, but they could speed up or slow down if economic conditions change. From a technical perspective, the EUR/USD holds a negative tone according to the daily chart. The RSI points south below its midline, while the MACD shows decreasing buying interest. At the same time, the price failed to establish above a bearish 20-day SMA which offers dynamic resistance at around Tuesday's high of 1.0555. The EUR/USD pair needs to at least overcome this hurdle to ease the renewed bearish pressure. The next resistance could be found at the 1.0640-50 area. On the other hand, the loss of the 1.0430 support zone could expose the 1.0400 psychological level and the January 2017 low of 1.0340.
by Alex_Boltyan_FXAnalyst
EUR/USD Recovery Gains Traction The EUR/USD pair gained bullish momentum on Tuesday and pushed to fresh six-day highs, propelled by improving sentiment in financial markets. The U.S. dollar weakened across the board as stocks advanced in Europe and Wall Street, helping the EUR/USD to extend its bounce from a five-year low of 1.0348 struck on Friday to a high of 1.0555 on Tuesday. The pair is advancing for the third day in a row, a milestone it hadn’t accomplished since mid-March. Further support came after another revision of the European Union Q1 Gross Domestic Product and hawkish comments from ECB member Klaas Knot. The Q1 GDP posted a 0.3% growth from the previous quarter and 5.1% from a year earlier. Additionally, ECB’s Knot said a 50 bps hike in July shouldn’t be ruled out if inflation broadens and accumulates. Meanwhile, Fed Chairman Jerome Powell said in an event on Tuesday that the Fed is comfortable with 50 bps rate hikes but that the FOMC could speed up or slow down if economic conditions change. From a technical standpoint, the EUR/USD pair holds the short-term negative bias according to the daily chart, although the pair could extend the upward corrective movement in the upcoming sessions. Above the 1.0550 area, immediate resistances are seen at 1.0580, 20-day SMA, and the May 5 high at 1.0640. A break above this latter could put the 1.0750 zone on the radar. Still, the EUR/USD is expected to remain vulnerable below a descending trendline drawn from February highs, currently at 1.0890. On the other hand, the loss of the 1.0470 area could revive the bearish momentum and quickly send the pair to the 1.0348 low. A break below the 1.0348-1.0340 zone would expose the 1.0300 psychological level.
by Alex_Boltyan_FXAnalyst
Gold Bounces After Dip Below $1,800Gold price fell to a four-month low at the beginning of the trading week, with spot XAU/USD bottoming out at $1,786 an ounce as weaker-than-expected Chinese data weighed on investors’ sentiment and boosted the greenback across the board. However, the yellow metal managed to recover above the $1,800 level and closed Monday with gains at the $1,825 area as market mood improved throughout the day. At the same time, U.S. yields – which could be considered the cost of opportunity of holding the non-yielding metal – remained depressed on Monday. Rising bond yields have been weighing on gold prices dragging the XAU/USD from a high of $2,080 in March to below $1,800 an ounce. Treasury yields traded near three-year highs early last week before pulling back. The yield on the 10-year note was down at around 2.88% after peaking at 3.203% a week ago. From a technical standpoint, the XAU/USD holds a short-term negative bias according to the daily chart. The MACD and the RSI hover below their midlines, although moving away from recent lows. Still, the price has broken below an ascendant trendline drawn from August 2021 lows and trades below its main moving averages, while the 20-day SMA is accelerating below the 100-day SMA, completing a bearish cross. On the downside, if XAU/USD breaks decisively below $1,800, the next supports are seen at the January 28 low at $1,780 and the $1,760 area, followed by the September 2021 low of $1,721 an ounce. On the other hand, the yellow metal needs to regain the $1,835-$1,845 area, where the 200-day SMA converges with the broken trendline, to ease the short-term pressure and attempt a recovery toward $1,883, where the SMAs crossover has taken place.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
EUR/USD Bearish Bias Takes Hold, Lowest Weekly Close Since 2002The EUR/USD pair managed to recover from fresh five-year lows and regained the 1.0400 mark, helped by the improvement in market sentiment. The euro fell to its lowest level since January 2017 at 1.0348 on Friday but trimmed losses as the dollar staged a correction across the board while US stock indexes rallied. Still, the EUR/USD is poised to record its lowest weekly close since December 2002 at around 1.0400. Despite “hawkish” hints from European Central Bank President Christine Lagarde, the monetary policy divergence with the Federal Reserve is likely to continue to drive the EUR/USD lower. The Fed has already begun its tightening cycle and has more room for harsh measures to combat inflation than the ECB, as the Russia-Ukraine conflict is taking a heavier toll on the European economy. From a technical perspective, the EUR/USD pair holds a negative bias according to the weekly chart. However, technical indicators point to oversold conditions, which could favor a consolidative phase or even a limited upward correction before another leg down. The daily chart offers a similar picture, although the RSI has already begun to correct oversold readings. The next bearish target is seen at the January 2017 low of 1.0340. Should the EUR/USD breach this level, it will be trading at its lowest since 2003, focusing on the 1.0300 area. On the other hand, short-term resistance could be found at the previous low at around 1.0470, followed by the 20-day SMA at 1.0600. A recovery beyond this level seems unlikely at this point in the absence of fundamental triggers.
by Alex_Boltyan_FXAnalyst
1
EUR/USD Breaks Below 1.0400, Targets 2017 Low The EUR/USD pair finally broke below the 1.0400 psychological level on Thursday and posted its lowest level since January 2017 at 1.0353 during the New York session on broad dollar strength, with the DXY also hitting a fresh two-decade high at 104.92. The greenback benefited from safe-haven demand flows as the risk-off environment pushed down U.S. yields. The yield on the 10-year note pulled back to 2.86% after hitting a high of 3.203% earlier this week. Rising tensions between Russia and Ukraine were among the factors triggering risk aversion. Russian Vice President Dmitry Medvedev warned that continued Western financial and military assistance to Ukraine might trigger a conflict between Russia and NATO. On the other hand, “hawkish” comments from ECB President couldn’t offer relief to the euro. In a speech at the Slovenian Central Bank on Wednesday, Christine Lagarde said that she considers it "appropriate" for monetary policy to return to its normal course and hinted at a summer rate hike. Still, Lagarde did not put a date on the decision yet. From a technical perspective, the EUR/USD short-term outlook remains bearish according to indicators in the daily chart. The RSI shows a steep negative slope entering oversold territory, while the MACD histogram has printed a red bar. On the downside, the next target is seen at the January 2017 low at 1.0340. If the pair breaks below this level, it will be trading at its lowest level since 2003 and potentially putting parity on the table. On the other hand, the previous low at 1.0470 is now the immediate resistance level, followed by the psychological 1.0500 mark and the 20-day SMA currently at the 1.0610 area.
by Alex_Boltyan_FXAnalyst
EUR/USD Shrugs Off U.S. CPI Data, Rebounds To 1.0550 Zone The EUR/USD pair advances modestly on Wednesday after taking a round-trip to the 1.0500 area on the back of higher-than-expected U.S. CPI data. On Wednesday, data showed U.S. Consumer Price Index rose by 8.3% over the year to April, above the 8.1% expected. Excluding food and energy, the CPI grew by 6.2%, also above the 6.0% forecasted by analysts. Still, both readings are below March’s four-decade high, which supports the view that inflation may have peaked. The EUR/USD pair hit a low of 1.0501 as the dollar strengthened as a knee-jerk reaction but quickly returned to pre-data levels around 1.0550. From a broader perspective, the EUR/USD pair has entered a consolidation phase this week after bottoming out at a five-year low of 1.0470 last Thursday. Following Federal Reserve’s decision to hike interest rates by 50 basis points on May 4, the EUR/USD stabilized in the 1.0490-1.0600 range as the market saw its expectations realized. The divergence between the Fed and the European Central Bank has kept the EUR/USD in a downtrend over the last months. However, investors have begun to think that the ECB would have no choice but to raise rates in July, which has helped the euro to pare losses. From a technical standpoint, the short-term perspective remains neutral to slightly bearish for the EUR/USD according to the daily chart. Although it has no slope, the RSI remains below its midline, while the MACD histogram is now printing green bars, reflecting the recent rangebound trading. Still, the price holds below its main moving averages and remains extremely close to its cycle low. A break below the 1.0490 area could send the pair quickly to the 1.0470 low. If this level is broken, bearish momentum could revive with next targets seen at the 1.0400 psychological level and then 1.0340, 2017 low. On the other hand, a break above 1.0600 could pave the way to the 20-day SMA at 1.0650. The next resistance area is seen at 1.0750.
by Alex_Boltyan_FXAnalyst
Gold Slumps And Threatens Key Support AreaGold prices fell sharply on Tuesday as the U.S. dollar continued to strengthen despite the pullback seen in U.S. yields. XAU/USD fell to $1,835 an ounce, recording its lowest level in three months. Still, comments from Federal Reserve Cleveland President Loretta Mester stating that 75 bps rate hike is not out of the table “forever” and the risk-off mood helped to boost the greenback. Meanwhile, investors’ focus turns to US Consumer Price Index figures that will be published on Wednesday. Market consensus point to an 8.1% annual rate in April, while excluding food and energy, inflation is expected to come at 6%. If expectations are confirmed, inflation will indeed be lower than in March, supporting the prospects that the global inflationary pressure is already peaking. On the other hand, higher than expected readings could lift gold prices as investors seek hedge against inflation. From a technical perspective, XAU/USD holds a bearish short-term bias according to indicators in the daily chart. The RSI and the MACD are gaining bearish momentum below their midlines, while the price is threatening an ascending trendline from August 2021 lows that converges with the 200-day SMA at around $1,835, making this a critical support level. A loss of this area would likely increase bearish pressure on the XAU/USD, sending the price to next support level at the $1,800 mark. Below the latter, next target is seen at the $1,780-50 zone. On the other hand, the yellow metal needs to regain the 100-day SMA at $1,883 to ease immediate pressure and attempt a recovery toward $1,900.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
1
DXY Hits Fresh Two-Decade High Underpinned by YieldsThe U.S. dollar index, which measures the value of the dollar against a basket of currencies, struck its highest level since 2002 at 104.18 on Monday as the greenback benefited from risk aversion and higher bond yields. The DXY printed its third gain in a row and rose past 104.00 to hit its highest in nearly two decades before losing momentum during the New York session. At the time of writing, the index is trading at the 103.70 area. U.S. Treasury yields pushed higher and reached fresh highs. The yield on the 10-year note reached a high of 3.203%, while the one on the 30-year bond hit 3.309% before easing. Solid U.S. nonfarm payrolls continue to support the Federal Reserve tightening cycle, which in turn remains a tailwind for the dollar. Key U.S. inflation data will be published on Wednesday, which is expected to show consumer prices rose 8.1% over the year to April and 6% when excluding food and energy, a tad slower than in March. From a technical perspective, the DXY holds the bullish bias according to the daily chart. Although the RSI and MACD remain in positive territory, they continue to show loss of momentum favoring a phase of consolidation and even a limited downward correction. In terms of technical levels, a breakout of the 104.18 level could expose the 105.00 psychological level and the December 11 2002 high of 105.63. On the other hand, the immediate support is seen at the 103.00 area, followed by last week’s low of 102.35 and the 20-day SMA around 101.95.
TVC:DXY
by Alex_Boltyan_FXAnalyst
EUR/USD Holds On To Slim Gains After NFPThe EUR/USD managed to advance modestly on Friday following the US nonfarm payrolls data release as the greenback pulled back across the board. At the time of writing, the EUR/USD pair is trading at the 1.0550 area, holding on to slight daily and weekly gains after pulling back from a daily high of 1.0598. US nonfarm payrolls came out in line with market estimates. The US economy added 428,000 new jobs in April, versus 391,000 expected, while the average hourly earnings rose 5.5% YoY and the unemployment rate remained at 3.6%. However, with the Fed's monetary policy path set, the European Central Bank's gradual and accommodative monetary stance is the main factor that could continue to weaken the euro. In addition, risk aversion coming from the conflict between Russia and Ukraine and the outbreaks of Covid-19 in China will likely continue to favor the greenback. From a technical standpoint, the outlook remains clearly bearish according to the weekly chart, even though the EUR/USD is poised to post its first weekly gain after four consecutive falls. The daily chart shows the same picture as the pair continues to move sideways between 1.0500 and 1.0600 after a six-day losing streak seen in late April. The RSI has gained an upward slope but remains below its midline, while the MACD remains in sellers’ territory, although showing decreasing selling momentum. On the downside, the EUR/USD pair could find immediate support in the 1.0500-1.0490 area, where the psychological level converges with the weekly low. A loss of this area could expose the five-year low struck last week at 1.0470 and the 1.0400 zone. On the other hand, immediate resistance is seen at the 20-day moving average, currently at 1.0710, followed by the 1.0800 area.
by Alex_Boltyan_FXAnalyst
EUR/USD: Post-Fed Rally Falters Amid Risk Aversion The EUR/USD pair reversed Wednesday’s gains and fell to retest weekly lows as a bout of risk aversion halted the Fed decision-led spike. The pair dropped from a high of 1.0641 to a low of 1.0492 before stabilizing at the 1.0550s. The Federal Reserve decided on Wednesday to hike the Fed funds rate range by 50 bps to 0.75%-1.00%, the biggest increase in 22 years. At the press conference, Chair Powell confirmed that Quantitative Tightening – reducing the balance sheet size – will start in June, although at a slower pace than expected by analysts. Powell also ruled out a 75bp hike and instead pointed out two –not four – 50bp increases at upcoming meetings. The “not-so-hawkish” message put the dollar under pressure and sent stocks soaring in the aftermath. However, everything changed on Thursday after the Bank of England warned that the U.K. economy could fall into recession this year. The BoE triggered risk aversion across financial markets, which boosted U.S. yields and the greenback while weighing on riskier assets. The yield on the 10-year note reached its highest level since 2018 at 3.106%, while the DXY reached a marginal new cycle high at 103.94. As for the EUR/USD, the pair took a U-turn and dropped back below 1.0500 before recovering slightly. The short-term technical perspective remains bearish according to the daily chart. The RSI has turned back south after correcting oversold conditions, while the MACD remains in negative territory, although signaling the loss of selling momentum. The immediate support level is now seen at the weekly lows around 1.0490, followed by the five-year low struck at 1.0470 last week. A break below this level could pave the way to 1.0400 en route to 2017 lows at 1.0340. On the other side, the EUR/USD needs a close above the 20-day SMA, currently at 1.0710, to alleviate the immediate pressure and attempt a rise toward 1.0800.
by Alex_Boltyan_FXAnalyst
1
EUR/USD Rises Above 1.0600 After Fed Delivers 50bp Rate HikeThe EUR/USD pair pushed higher as the dollar weakened across the board following the Federal Reserve's decision to raise the Fed funds target range by 50 bps to 0.75-1.00% as expected. This was the first 50-basis point hike by the Fed in 22 years. The EUR/USD climbed to a daily high of 1.0631 during the subsequent press conference by Chair Jerome Powell. With the 50bp rate increase already priced in, investors focused on not-so-hawkish comments. Powell said that they were not actively considering 75bp increases. Instead, he pointed out that it will likely be 50bp increases at the next two meetings if economic conditions warrant it. The Fed also announced it will begin its Quantitative Tightening (QT) program – reducing its balance sheet – on June 1. However, the reduction will be at a slower pace than the market had forecasted. The schedule will see $30 billion of Treasurys and $17.5 billion on mortgage-backed securities roll off. After three months, the caps will be doubled. All in all, Powell wasn’t as aggressive as anticipated, which led to a pullback in Treasury yields and the dollar. Still, the long-term fundamental picture remains the same, with monetary policy divergences weighing on the EUR/USD. From a technical perspective, the EUR/USD pair holds the bearish tone despite Wednesday’s bounce as indicators remain in negative territory while the price trades below its main moving averages in the daily chart. On the upside, the next resistance is offered by the 20-day SMA at 1.0730, followed by the 1.0800 psychological level. If the euro can rise past this latter, it could ease the short-term bearish pressure. On the other hand, immediate support comes at the 1.0500 level, and then the cycle low of 1.0470 and the 1.0400 ahead of 2017 yearly low at 1.0340.
by Alex_Boltyan_FXAnalyst
1
EUR/USD Takes A Breather Ahead Of The Fed VerdictThe EUR/USD pair has entered into a consolidation phase around the 1.0500 level after hitting a fresh five-year low of 1.0470 on Thursday. The pair seems to have found a new comfort zone as investors prepare for the Federal Reserve decision on Wednesday and the nonfarm payrolls report on Friday. The Fed is expected to hike rates by 50 basis points when it concludes its meeting on Wednesday. Investors are also anticipating President Jerome Powell to hint at a move toward reducing its balance sheet. In addition, risk sentiment improved on Tuesday, giving some respite to the euro. Wall Street indexes traded in the green while U.S. Treasury yields pulled back from multi-year highs. However, EUR/USD recovery has remained limited below 1.0580 while the dollar keeps the upper hand fundamentally speaking, all of which supports fresh cycle lows in the near-term. Still, profit taking and erratic moves around big economic events cannot be ruled out. From a technical perspective, the EUR/USD pair maintains the short-term bearish bias according to the daily chart. Indicators remain below their midlines, favoring further falls. However, the RSI continues to point to oversold conditions keeping the bearish potential limited at the time being. A break below the 1.0470 level would pave the way for a test of the 1.0400 psychological level, followed by the 2017 yearly low at 1.0340. Below this latter, the EUR/USD would be trading at its lowest level since 2003. On the other hand, initial resistance is seen at the 1.0590-1.0610 area, followed by 1.0650 and then the 20-day SMA at 1.0745.
by Alex_Boltyan_FXAnalyst
Gold Tumbles Amid Surging U.S. YieldsGold slumped below $1,900 to a 11-week low on Monday as U.S. Treasury yields and the dollar pushed higher, dragging down the yellow metal price. With the Federal Reserve decision around the corner, the yield on the U.S. 10-year note reached a fresh cycle high at 3.01%, while the yield on the 30-year bond peaked at 3.049%. The Fed is expected to increase its main rate by 50 basis points on Wednesday, May 4th, when it concludes its two-day meeting. Even though this decision is mostly priced in, investors will be paying attention to Jerome Powell's rhetoric and details on how the central bank plans to reduce its balance sheet. The surge in yields pushed the XAU/USD price through the 100-day SMA and to its lowest level since February in the $1,855 an ounce area. The short-term technical perspective remains bearish for the yellow metal according to technical indicators in the daily chart. Both the RSI and the MACD are in sellers’ territory while showing increasing bearish pressure. At the same time, the price trades below the 20- and the 100-day SMAs while it moves toward the critical support at the $1,835 zone, where the 200-day SMA converges with an ascendant trendline coming from August 2021 lows. A break below this level could turn the longer-term picture to the downside and pave the way for a test of the $1,800 area and even the January low at $1,780 an ounce. On the other hand, the XAU/USD needs to regain the $1,930 level to ease the immediate bearish pressure. The next resistances are seen at the $1,960 and $2,000 levels.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
DXY Faces Profit Taking But Heads For Weekly Gain The U.S. dollar is facing some profit-taking into the week (and the month) end, with the DXY pulling back after hitting a two-decade high just below 104.00. After six consecutive days of gains, the DXY reached its highest level since December 2002 at 103.92 on Thursday, underpinned by risk aversion and expectations the Federal Reserve will hike its main rate by 50 basis points when the FOMC meets next week. On the data front, U.S. inflation tracked by the headline PCE rose 6.6% annualized in March and 5.2% in core prices, both readings pretty much in line with expectations. However, on Thursday, the U.S. GDP showed an annualized 1.4% contraction in the first quarter, well below the forecast of a 1.1% increase. Robust economic performance is a necessary condition for the Federal Reserve to maintain its monetary tightening path over the next months, so slowing growth might pose a challenge to the Fed plans. Still, this reading alone doesn’t change the May 4 decision expectations. From a technical perspective, the DXY maintains a bullish outlook according to the weekly and daily charts. Despite Friday’s correction, the index is on track to post its fourth weekly advance in a row and continues to trade well above its moving averages and an ascending trendline coming from May 2021 lows. However, both charts show signs of bullish exhaustion, so a corrective move, or at least a consolidation phase, seems likely. On the downside, the initial support area is seen at the 101.00-100.85 range, where the weekly lows and the 20-day SMA converge. A break below this zone could see the price falling to the 100.00 psychological level. On the other hand, if the DXY breaks above its cycle peak of 103.92, the next resistances could be found at the 104.30 area, followed by 105.00.
TVC:DXY
by Alex_Boltyan_FXAnalyst
EUR/USD Searches For Support After Losing 1.0500The EUR/USD pair broke below the 1.0500 mark and hit a fresh five-year low on Thursday as the U.S. dollar continued to outperform its peers on expectations the Federal Reserve would hike rates more aggressively in upcoming meetings. The pair bottomed out at 1.0470 but managed to briefly climb back above the 1.0500 psychological level after the U.S. reported an unexpected contraction economic during the first quarter. The GDP fell 1.4% in Q1 2022, well below expectations of a 1.1% increase, weakening the dollar. In case of persistent weakness in U.S. indicators, the Fed’s determination to raise rates more quickly could be challenged, which in turn would weigh on the greenback. Meanwhile, Germany reported a 7.4% annualized consumer inflation rate in April, slightly above the forecast of 7.2%. Increasing inflation rates in the Eurozone continue to add pressure on the European Central Bank to begin its monetary tightening cycle. From a technical perspective, the EUR/USD maintains a bearish short-term bias, according to the daily chart However, the RSI remains in oversold territory, favoring a pause following six consecutive days of heavy losses and lower lows. The 1.0620 area stands as immediate resistance, followed by the former support now turned to resistance at 1.0757. A break above this level could allow a test of the 20-day SMA, currently around 1.0810. On the other hand, loss of the 1.0470 area would expose the 2017 yearly low at 1.0340, with interim support seen at the 1.0400 area.
by Alex_Boltyan_FXAnalyst
EUR/USD Crumbles To Five-Year Lows, Holds Above 1.0500 For NowThe EUR/USD pair extended its free fall on Wednesday and hit its lowest level since March 2017 at 1.0514 as the greenback remained firm. Still, the pair managed to recover some losses during the New York session as market sentiment improved slightly. The main driver behind the EUR/USD slump seems to be divergent monetary policy stances between the Federal Reserve and the European Central Bank as the former is expected to raise interest rates more aggressively at its May 4 meeting, while the latter remains in wait-and-see mode as it faces a tougher inflation-growth trade off. At the same time, renewed global growth concerns sparked by China’s strict lockdowns and geopolitical uncertainty as the Russia Ukraine conflict seems far from over have been favoring the U.S. dollar over the last weeks. The DXY, which measures the value of the U.S. dollar against a basket of currencies, has rallied to its highest level in five years at 103.28 on Wednesday. The U.S. will release its first estimate for the Q1 GDP on Thursday, which is expected to show a 1.1% annualized growth, a considerably slower rate than the 6.9% from the previous quarter. From a technical perspective, the EUR/USD pair holds the bearish bias intact as the dollar seems unstoppable at the time being. However, with most of the Fed action already priced in, a corrective rally cannot be ruled out. Immediate resistance is seen at 1.0650, followed by the former support at 1.0757. Still, any upward move should remain limited by the 20-day SMA, currently around 1.0840. On the downside, loss of 1.0514 would pave the way to the March 2017 low at the 1.0490 area, en route to January 2017 lows at the 1.0340 zone.
by Alex_Boltyan_FXAnalyst
U.S. Dollar Index Breaks Above 102.00, Highest in Two Years The U.S. Dollar Index extended gains on Tuesday and reached fresh two-year highs above the 102.00 level. The greenback continues to strengthen across the board amid risk aversion and geopolitical concerns, along with prospects of a more aggressive tightening move by the Federal Reserve next week. Analysts expect a 50 bps rate hike on May 4, especially after Chair Jerome Powell noted that he believed it is appropriate to move faster. The DXY, which measures the value of the U.S. dollar against a basket of currencies, has risen for the fourth day in a row, and it is on track to accomplish its 17th daily gain out of the last 19 trading days. The fact the dollar continues to push higher despite the US Treasuries yields correction across the curve is a signal of how strong the uptrend is. The DXY peaked at 102.12, its highest level since March 24, 2020, and technical indicators in the daily chart point to a bullish continuation. However, given that the RSI has already reached overbought territory, the index will likely go through a consolidation phase before another leg higher. A decisive break above the 102.10-20 area would open the door to a test of the 2020 high of 102.97. Beyond the 103.00 area, the next target for bulls could be the 103.25-40 area, where several January 2017 highs converge, ahead of the 2017 yearly high of 103.82. On the other hand, the 101.00 area stands as the initial support level in case of corrections, followed by the 20-day SMA at the 100.10 zone. Loss of this latter could delay further gains exposing the 99.50 area. However, the dominant trend would remain tilted to the upside as long as the DXY holds above the ascending trendline coming from May 2021 lows, currently around 96.85.
TVC:DXY
by Alex_Boltyan_FXAnalyst
EUR/USD Continues to Push Lower, Eyes 2020 LowsThe EUR/USD pair plunged during the European session and struck a fresh two-year low of 1.0707 before recovering modestly, as risk aversion continues to dominate markets at the beginning of the week. The United States 10-year / Germany 10-Year government bond yield spread widened on Monday, adding further pressure on the EUR/USD. The euro remains on the back foot amid monetary policy divergence between the Federal Reserve and the European Central Bank, woes regarding the Ukraine war and renewed concerns about global growth as China imposes tougher lockdowns. The EUR/USD managed to cut back some of its intraday losses but remains capped by the previous cycle lows, now turned into resistance, around 1.0760. The short-term technical perspective for the EUR/USD remains bearish, according to the daily chart. The RSI holds a steep downward slope below its midline, not hitting yet oversold levels, while the MACD remains in negative territory and shows increasing selling interest. At the same time, the price continues to set lower lows as it trades well below its main moving averages. A similar picture is shown by the 4-hour chart, which favors a bearish continuation. A break below the 1.0700 psychological level would pave the way to the 2020 low of 1.0635, set on March 23 at the very beginning of the pandemic. The April 2017 monthly low of 1.0569 would be the next target for bears ahead of the 1.0500 area. On the other hand, the EUR/USD needs to regain the 1.0890-1.0900 area, where the 20-day SMA reinforces the psychological level, to ease the immediate pressure and attempt a bounce towards 1.1000.
by Alex_Boltyan_FXAnalyst
GBP/USD Slumps to 18-Month Lows On Bailey's Comments, Strong USDThe GBP/USD pair tumbled on Friday and hit its lowest level since October 2020, pressured by comments from Bank of England Governor Andrew Bailey and a stronger dollar across the board. The pair lost more than 200 pips, falling from a daily high of 1.3035 to an 18-month low of 1.2822 during the New York session. BoE Governor Andrew Bailey said on Thursday that the bank was walking a tight line between tackling inflation and avoiding recession. On Friday, he added that the BoE would only do quantitative tightening active sales in a stable market. In contrast, Fed Chair Jerome Powell said he considers it "appropriate" to accelerate the pace of monetary contraction and that the U.S. economy can withstand the 50-point increase that is "on the table" for the May meeting. Adding to GBP weakness, the UK reported on Friday that retail sales decreased by 1.4% in March after falling by 0.5% in February. This reading was much worse than the 0.3% contraction expected. From a technical perspective, the GBP/USD pair holds a negative bias according to indicators in the weekly chart, while the pair is poised to post its biggest weekly drop in 2022. In the daily chart, indicators also point to a bearish continuation. The RSI shows a steep downward slope as it moves into oversold territory, while the MACD histogram reflects renewed selling momentum. Next supports could be found at the 1.2800 psychological level, followed by the 1.2750 area, ahead of the September 2020 monthly low of 1.2675. On the other hand, immediate resistances are seen around 1.2900 and 1.3000, ahead of the 20-day moving average lying around 1.3050.
by Alex_Boltyan_FXAnalyst
EUR/USD Reverses Early Gains, Aims 1.0800The EUR/USD pair failed to secure early intraday gains and finished Thursday lower as hawkish comments from Fed Chair Jerome Powell lifted Treasury yields and the greenback during the American afternoon. The shared currency had risen on the back of comments from European Central Bank Vice President Luis de Guindos who hinted at the possibility of a first rate hike in July. However, ECB President Christine Lagarde couldn’t live up to expectations at an IMF panel in Washington. She said inflation must be address “in a gradual way,” which in contrast with Powell's comments sent EUR/USD back below 1.0850. At the same panel, Powell did signaled that a 50 bps rate hike in May was likely. “It is appropriate in my view to be moving a little more quickly,” he said. This triggered a selloff in stocks and a jump in U.S. yields. As for the EUR/USD, the pair maintains the short-term negative perspective, according to technical indicators in the daily chart, while the price failed to consolidate above the 20-day SMA, all of which favors a downward move. The RSI and the MACD remain in bears territory, although turning flat, reflecting the dwindling selling momentum. The EUR/USD would need a break below the 1.0800 to bring the bearish momentum back and expose YTD lows at 1.0757 ahead of the 1.0700 psychological level and March 2020 low of 1.0635. On the other hand, immediate resistance remains at the 20-day SMA, currently around 1.0916, followed by 1.0940 and then the 1.1000 level.
by Alex_Boltyan_FXAnalyst
EUR/USD Extends Recovery But Lacks Momentum The EUR/USD pair extended the bounce from two-year lows on Wednesday, but has been unable to consolidate above the 1.0850 area, keeping the short-term bearish bias alive. Hawkish comments from ECB's member and the pullback in US yields have been the main drivers behind the EUR/USD recovery. Member of the ECB Governing Council Martins Kazaks said that a rate hike was “possible” in July, boosting the shared currency. However, while European economies remain exposed to the conflict in Ukraine, ECB officials have not rushed into a tightening cycle, and the divergence with the Fed stance could limit a substantial long-term recovery of the euro. On the other side of the equation, the U.S. dollar weakened broadly on Wednesday as Treasury yields dropped across the curve. The yield on the 10-year note fell sharply from a high of 2.981% to a low of 2.819%. From a technical perspective, the EUR/USD pair maintains the bearish bias according to daily chart indicators. While the RSI bounced from lows, in tandem with price, and is gaining positive slope, it remains well below its midline. At the same time, the MACD remains in negative territory although showing decreasing selling momentum. The EUR/USD price holds below its main moving averages, which maintain bearish slopes and offer dynamic resistance, with the 20-day SMA currently around 1.0917. If the pair manages to break above the latter, next resistance could be found around the 1.1000 psychological level. On the other hand, the YTD low of 1.0757 stands as immediate support, followed by April’s 2020 low of 1.0727 and then the 1.0700 mark.
by Alex_Boltyan_FXAnalyst
DXY Rises Past 101.00 Underpinned by Yields The U.S. Dollar Index (DXY) is rising for the fourth consecutive day on Tuesday, having hit its highest level in over two years above 101.00 during the New York session. The U.S. currency continues to appreciate versus its major rivals, underpinned by a stunning rally seen in Treasury yields across the curve. The expectations of the Federal Reserve switching to more aggressive monetary tightening have been pushing yields, and the dollar, up. The yield on the U.S. 10-year note reached a high of 2.928%, while the one on the 30-year bond surpassed 3% and hit 3.016%, its highest level since March 2019, before retreating slightly. In addition, the deterioration of the geopolitical situation after Russia invaded Ukraine, the economic toll new lockdowns in China could take on economic growth, and the robust performance of the U.S. economy are supporting the greenback amid safe-haven demand. From a technical perspective, the DXY holds a clear bullish bias, with indicators gaining bullish slopes in the daily chart while the price remains above its main moving averages. Furthermore, an ascending trendline coming from May 2021 lows confirms the positive perspective and offers key support to the DXY. However, the RSI has already reached overbought levels, which could give way to a phase of consolidation before another leg higher. A decisive break above the 101.00 area could see the index reaching the 2020 high of 102.99, with the 101.80-102.00 area offering interim resistance. On the other hand, short-term support is seen at 100.00, followed by the 20-day SMA at 99.45. A more significant level is provided by the ascending trend line, currently at the 96.70 area.
TVC:DXY
by Alex_Boltyan_FXAnalyst
EUR/USD Remains Limited Below 1.0800 On Dollar StrengthThe EUR/USD pair extended its decline on Monday, recording its third daily loss in a row, with the dollar strengthening across the board on the back of higher U.S. yields. The EUR/USD slid back below 1.0800 to 1.0769 but managed to hold a few pips above the low set last week at 1.0756. The yield on the US 10-year note reached a high of 2,884% while the one on the 30-year bond struck 2,969%, being the highest levels in two years. At the same time, the Dollar Index (DXY) also hit its strongest level since April 2020 at 100.86. Meanwhile, the euro remains on the back foot after the European Central Bank kept a dovish stance after its monetary policy decision last week, kicking the can to the third quarter, at least. Divergent monetary policies coupled with no signs of peace in Eastern Europe, continue to push the EUR/USD lower. From a technical perspective, the EUR/USD holds a downward bias according to the daily chart. The MACD and the RSI remain in negative territory, gaining bearish momentum, but not hinting at oversold conditions just yet. The euro-dollar also holds a bearish perspective according to the 4-hour chart, although indicators are mostly flat at the time being, potentially signaling a consolidative phase before another leg down. A break below the 1.0750 area could pave the way to April’s 2020 low of 1.0727 and then target the 1.0700 psychological level. On the other hand, the EUR/USD needs to overcome the 1.0830 zone to ease the immediate selling pressure and attempt a bounce toward the 1.0935 area where last week’s highs converge with the 20-day SMA.
by Alex_Boltyan_FXAnalyst